28: Pension Schemes Bill could be in force by the end of the year

The Pension Schemes Bill represents a material change in the regulation of defined benefit pension schemes as well as seeking to shape defined contribution pension benefit provision for the future.

It received a second reading debate in the House of Commons on 7 October 2020 and the Public Bill Committee will now scrutinise it line by line. The first sitting of the Public Bill Committee will be on Tuesday 3 November and it is scheduled to report by Thursday 5 November.

There will no doubt be amendments to the detail of the Pension Schemes Bill before it becomes law but it is making progress through the legislative process in line with the government’s ambition to bring it into law by the end of the year.

In brief the main aims of the Pension Schemes Bill include:

establishing a framework for the operation and regulation of collective money purchase schemes;
introducing measures intended to strengthen the Pension Regulator’s powers and improve the information available to it, to better enable it to protect defined benefit scheme members’ savings. These include:
- two new offences of avoidance of an employer debt and conduct that risks accrued scheme benefits without a reasonable excuse – both of which are punishable by unlimited fines or up to seven years in prison;
- two new grounds for issue of a contribution notice under the employer insolvency test and employer resources test;
creating a legislative framework for pensions dashboards – digital interfaces that enable people to see all their pension savings in one place so that individuals can make better decisions about their retirement plans; and
a number of other provisions relating to pension schemes including:
- proposed changes to the defined benefit scheme funding regime requiring trustees to have a funding and investment strategy’ for providing pension benefits over the longer term and to report on its implementation to the Pensions Regulator in a new ‘statement of strategy’;
- requiring trustees to undertake specified governance-related activities and to publish information relating to the effects of climate change on their scheme; and
- stipulating the conditions which persons, including a pension scheme member, will need to meet to have a statutory right to transfer their pension savings to another scheme in order to better protect members from pension scams.